Legislation takes aim at rising drug costs

April 08-- Apr. 8--Skyrocketing healthcare costs and the ongoing efforts to combat them remain on the forefront of the battle to reform healthcare in the United States and in the state of Oklahoma.

In recent years, Oklahoma has legalized medical marijuana and entertained the idea of expanding Medicare, partly in an effort to relieve the strain on consumers as well as the state's coffers.

The latest effort would facilitate the return of an estimated $1.5 billion to the state's economy while also offering consumer-added protections when making purchases through their insurance copay or via cash.

HB 2632, the Patient's Right to Pharmacy Choice Act, currently making its way through the state Legislature, would enact a number of regulations on patient benefit managing companies -- PBM's act as go-betweens for pharmacies and insured companies, negotiating the price of drugs paid by the insurer.

According to Bill Moore, pharmacist at Henry Roberts Express Pharmacy, PBMs originally were incorporated into the process to help companies reduce cost to their employees, though in recent years its focus has evolved from consumer protections to increasing profits.

Moore has actively supported HB 2632 and a sister bill in the state Senate -- both of which have passed in their respective chambers and are now awaiting committee hearing.

According to former State Representative and current lobbyist Pat Ownbey, three corporations control more than 80 percent of the PBM market, which gives PBM-owned pharmacies an unfair advantage over locally-owned pharmacies, leading to an estimated loss of more than $1.5 billion through mail-order long-term "maintenance medications."

Maintenance medication refers to drugs used through the duration of the patient's life or medications that have unlimited refill potential.

"Several times a day we will see a patient that was forced to go mail-order, their medication should have been here three days ago," Moore said. "They are bringing me a bottle saying, 'What do I do?' An empty bottle of insulin or an inhaler for their asthma. I'm put in a conundrum, do I break the law? This person needs insulin. Every day in Oklahoma we are put in this position, they were forced to go mail-order, the person would have probably chosen to do business with me in the first place had they been given the choice."

Moore said the current regulations disproportionately effects rural areas, sometimes forcing rural residents to travel long distances to find contracted pharmacies or to rely on out-of-state pharmacies to ship their medications.

"Nobody (private insurance) is able to audit these guys, these PBMs answer to no one," Moore said. "They are middlemen, they are not regulated by anyone. The only people able to audit them are state Medicaid programs."

According to Bloomberg, one such audit revealed that a PBM charged almost $200 for medication it valued at only $6 through a process known as spread pricing, where PMBs mark up the cost charged to a patient compared to what they reimburse the pharmacy.

Ownbey said that since three PBMs hold such a large portion of the market, they were able to impose gag clauses in their contracts that prevented a pharmacist from informing the consumer of the cost from using insurance via copays or through buying the medicine with cash. In these instances, the consumers unknowingly pay their copay of $20, $30 or $40 for a product they could have paid less for had they forgone the insurance process. While the Patient Right to Know Drug Prices Act, enacted in 2018, prevents the so-called gag clauses from being included in the PBM contracts, HB 2632 would bring state statutes in line with federal statutes. Neither legislation requires a pharmacy to disclose any potential cost difference, it only allows them to do so.

The US Senate is also set to host drug pricing hearings with PBM representatives next week, while earlier this week, according to Forbes, PBM Express Scripts announced a $25 cap on 30-day insulin prescriptions for "non-government funded" drug plans.

The PBMs primarily effect companies that provide their employees with insurance, while some states utilize PBMs for their state-run healthcare programs -- Oklahoma currently does not.

Ownbey said the proposed state legislation would not restrict or end the use of PBMs, but would create an oversight committee at the state level to prohibit "deceptive consumer practices and anti-competitive tactics against independent pharmacies," among other things, including "clawing back reimbursements without justification."

Clawing back reimbursements currently allows PBMs to retroactively reduce the reimbursement rates paid out to pharmacies well after a purchase is made.

Moore said the legislation first gained traction toward the end of the previous legislative session after similar legislation was enacted in Arkansas.

"Right now, it's do or die. These smaller pharmacies, these independent pharmacies are getting cut out to the point that they aren't going to survive," Moore said. "Those pharmacies are vital to those communities."

Moore attributed a 1010% increase in prescription drug cost since 1987, and 169% increase in patient out-of-pocket cost in the same time frame, to the growth of PBMs.

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